Nview Has Parts Crunch In Control

Market Watch

May 30, 1993|By DAVID RESS Daily Press

Is there a shortage of key components in view at nVIEW?

Tight supplies of the panels that are at the heart of nVIEW's high-tech projectors constrained the Oyster Point company's growth in 1991, while the flood of the panels in early 1992 outstripped the company's ability to sell its products and had it tripping over its own feet for a while.

Now, says chief executive Willy Donaldson, it looks as if supplies will be tight again.

But, somehow, Donaldson isn't looking too worried.

The panels - sandwiches of liquid crystals and transparent transistors - are among the most sought-after components in the computer business.

They make perfect screens for laptop computers, one of the hottest segments in the market. nVIEW uses the panels in its multi-media projectors, which can display computer data and video images.

Ever since Jim Vogeley set up nVIEW five years ago with a bright idea and some space in his dad's Yorktown garage, he and other nVIEW engineers have worked with Sharp Electronics to refine the panels.

Sharp supplies virtually all of the panels nVIEW uses. nVIEW's dependence on the Japanese company has long worried stock market analysts - especially since Sharp sells products that compete directly with nVIEW's.

Not to worry, Donaldson told the annual meeting last week.

nVIEW's relationship with Sharp is something it manages carefully. The years of engineering consultation and the early commitment to regularly buy large volumes of panels should pay off.

If there is a shortage of panels this year, as Donaldson expects, nVIEW's position will be protected, he says.

But just in case there are investors out there who wonder how much a carefully managed relationship matters when demand is heavy and supplies are tight, consider some figures buried in nVIEW's financial reports.

nVIEW's inventories are more than 2.5 times as large as they were a year ago, at $9.7 million.

The company's stock of panels alone now is nearly as large as its entire inventory of panels, finished products and work-in-progress was a year ago. nVIEW has also built up its stockpile of finished products.

That's no accident. nVIEW executives say the big inventory should give the company a cushion if supplies of panels are tight.

There could be another interesting side effect of a supply crunch.

Donaldson says one major thrust of nVIEW's engineering effort is cutting production costs. It's a natural response to a increasingly competitive market.

But if supplies of panels are tight, then supplies of products using the panels will be tight. nVIEW's competitors may be less keen then they had been to cut prices. And if prices hold steady, while production costs decline, that could mean a boost for nVIEW's profit margins.